Poor, poor Apple. The richest company in the world (sliding up and down, but always gliding close to the top) just wanted to find a car manufacturer to be its dance partner for its autonomous electric car project. He probably imagined that Hyundai and Nissan would fall for themselves for the simple opportunity to contribute with the latest technology and production expertise to a vehicle for which they would not receive any credit on the market.
Well, what a surprise – it didn’t happen. After Hyundai quarreled with (and past) a potential partnership and then It was rumored that Nissan to do the same, Apple met with a handful of automakers without showing anything for it. Now all he has to do is turn to a contract producer like Magna Steyr or his family friends at Foxconn, according to a new Bloomberg report.
It always seemed like it was going to go that way. This court game of Apple car manufacturers was played as a miserable Bachelor season in which none of the competitors want to be there, but still appeared anyway. It seems that Apple met with Ferrari during this exploratory phase, reports Bloomberg, which is tragically funny. There are no details on what this discussion entailed, but whatever the subject, “the discussions did not move forward.”
Hyundai, Nissan and Ferrari are not impressive start-ups ready to be ordered – they are multinational corporations that have made more cars than Apple has made computers. I would argue that much of Apple’s success over the past two decades may be due to its surprising lack of hubris. Sure, he talks big, but for the most part, he stays on his bandwagon, doesn’t introduce anything until he’s really ready, and gets into strange corporate connections and acquisitions that everyone can clearly see are doomed from the start . The thought that it could essentially subsume a car brand established as a contract manufacturer is uncharacteristic of Apple, but exactly the kind of hubris you would expect from a company in its position.
Of course, making cars is hard and expensive and I understand why Apple wanted to do that. As Bloomberg rightly points out, it reflects the way the company builds its gadgets. Tim Cook’s crew designs the product and someone else builds it.
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But there is a difference between asking, say, Magna Steyr to make your car and asking Hyundai. The latter has his own cars for sale, with his name on them. He probably won’t be as excited if the result is a booming success. A useful analogy from Bloomberg:
A longtime manager, from both Apple and Tesla Inc., said this would be like asking Apple for its bitter smartphone rival Samsung Electronics Co. to produce the iPhone. Apple wants to challenge assumptions about how a car works – how the seats are made, what the body looks like, the person said. A traditional carmaker would be reluctant to help such a potentially disruptive competitor, said the person, who asked not to be identified while discussing private issues.
Yes, Apple has a history of growing industries. It changed the way record companies distribute music and the way people buy it (well, until Spotify came along.) It also changed the way software is distributed. But the changing paradigms of how people find and use content is a beast quite different from a top-down reinvention of the way cars are made – probably the most complex physical “good” we buy.
It is also much more difficult to make money from the gate in this business. “Auto industry profit margins are lower than Apple’s current model, “Bloomberg told Goldman Sachs analysts in a recent investor note.
By opting for a partnership with a company like Magna, Apple can avoid the inevitable conflict of egos that would probably be resolved if it chose a consumer-oriented factory partner. There is another part of me that is shocked that a company with so much experience in selling things like Apple did not save time and acknowledged this earlier.